Loans to Irrevocable Trusts
Lending options for irrevocable trusts tend to be limited. Because recourse against the grantor / settlor is often times not possible most conventional lenders are not willing or able to provide financing on real estate held in the irrevocable trust. To compound the issue, once the Family Trust becomes Irrevocable, the abilities of the Trustee tend to be restricted. The majority of mortgage lenders would not be willing to lend on the real estate until it had been distributed and removed from the trust.
Fortunately there are some options available if you are a trustee in need of funds for a trust. There are a handful of private money lenders who are willing to provide short term financing to real estate held in Irrevocable Trusts. Typically these loans are intended to provide a cash infusion so that an equal distribution of the Irrevocable Trust can be made. Other times the loans are provided to cover the expenses of the trust until the distribution can be made.
If you are in need of a loan for an Irrevocable Trust, visit Cloanc.com for more information.
What Is an Irrevocable Trust?
An irrevocable trust is a type of trust where its terms can no longer be changed. Most trusts start as revocable, but when a life event such as death occurs, they transition to an Irrevocable Trust. At that point, the trust for the most part can not amended, changed or terminated without the permission of the grantor’s named beneficiary or beneficiaries; and even then limitation may exist. The grantor or settlor at that point has effectively transferred all ownership of assets into the trust and removes all of their rights of ownership to the assets and the trust.
What Is an Irrevocable Trust loan?
An irrevocable trust loan is a loan or mortgage typically secured by real estate. Unlike a conventional mortgage, the irrevocable trust loan is made to the trust as opposed to an individual. Since a trust unlike a person, often does not generate income or have the capability of showing credit worthiness, most lenders are not equipped to provide to trusts.